Obama finally discovers that bad rules kill jobs

January 19, 2011

U.S. federal regulations impose nearly $2 trillion in annual costs on American business, according to the Small Business Administration. President Barack Obama thinks that’s probably too much and now wants regulators to strike out needless red tape. Better late than never. Even better, Congress should have more power to do the cleanup itself.

At the very least, Obama’s executive order is another hint to corporate America that the president is eager to mend fences after a fractious 2010. And no doubt business groups will applaud, just as they did last month’s deal on tax rates and Obama’s reconstitution of much of President Bill Clinton’s economic team. Congressional Republicans are likely to approve as well, though some may grumble that the initiative should have preceded last year’s regulatory overhauls of Wall Street and the healthcare industry.

Yet Obama’s timing actually matches up with the onslaught of rule-writing stemming from those reform bills. Financial regulators, for instance, may spend two years or more adding meat to the bones of the Dodd-Frank law that was intended to prevent a repeat of the banking crisis. The president’s move is a reminder to keep an eye on the costs of old rules as well as new ones, even though the directive is more geared toward the former than the latter.

But here is the problem: Expecting regulators to whittle down their own responsibilities much is incredibly optimistic. They are hired to regulate, and broadly speaking the more they perform that function, the more funding and influence come their way. So there’s a case for giving lawmakers greater ability to make changes if regulators can’t bring themselves to do it — presidential order or not.

One idea is a bill introduced last year, and likely to be resubmitted, that would require Congress and the president to sign off on any new rule proposed by federal agencies that would have an annual economic impact of $100 million or more. Some 80 or more rules a year might qualify for such a review. Though it might not always make perfect sense, there’s also some merit behind efforts to force regulators to eliminate one old rule with similar cost for each new one they wish to impose. Initiatives like these would help ensure the ever-encroaching regulatory tangle was regularly pruned.


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Before any law can go into effect Congress should be required to hold hearings on the regulations that have been drafted along with a CBO estimate of the cost to the industry or public. It then should require a super majority vote to sign off on the regulations. This may help reduce the problem of “unintended consequences”. It may also let the rest of us know what is really in the bill.

Posted by Leon1 | Report as abusive

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Where was this guy – Pethokouk – when BUSH was adding $500 BILLION to the debt over his 8 years of HORROR, and amending regulations like the Uptick Rule? Another “Blame it on Obama” campaign by a Disgusting Republicans when, in fact, these laws were enacted before he even became President.
Republicans – ALL LIARS!

Posted by run66 | Report as abusive

What Red Tape??? The Red Tape, i.e laws that Protect against Poisoning the Air we breath, the water we drink, or the Food we Eat?? Jobs and Profits should NEVER out weigh responsible and ethical practices!!

Posted by CleanEnergyNut | Report as abusive

Are you saying we should de-reregulate or re-deregulate? To save $2T the SBA says gets siphoned out of the the US economy by unnecessary regs? What about the untold trillions that evaporated out of the economy during the Finacial Fiasco? How about the BP Gulf episode? Who was enforcing those regs? I usually agree with your columns but you’re full of crap on this one. Regulate the hell out of them and enforce the regs on the books ..

Posted by Woltmann | Report as abusive

Where was regulation oversight during the Bush years. Government doesn’t create or prevent jobs from being created. No net jobs created during the Bush years. This is just another strawman arguement put up by the Republicans. Business owns the Government!

Posted by dcrimso | Report as abusive

Congress overseeing the regulators. Sounds good. Just add another level of review. That’s the sort of oversight used in the military to replace a $300 hammer with a $600 hammer.

Posted by notme3832 | Report as abusive